Funnel Building: Increasing Average Contract Value

In my last post, I reviewed the connection between building a larger sales funnel and the skill of disqualifying prospects that can’t buy. For this article, I’ll share some insight into another funnel building skill which helps those who may not have the luxury of having too many prospects.

Years ago, I worked for an organization that was mired in a sales productivity sand trap. For several years, the average productivity per rep was stuck at about $1.4 million in software sales. As a result, we were faced with a challenging dilemma: either add people to grow the company – a very expensive option, or learn how to grow our deal size. Due to our limited market size, we ruled out the strategy to sell to more customers since they didn’t exist, and we considered focusing on shortening sales cycle time, but ended up getting that with the deal size increase as an added bonus.

The strategy that emerged was to use professional services to grow our deal size. This intitiative taught us how to grow our average contract value with both software and services while shortening our sales cycle. The key was targeting new stakeholders in our existing opportunities. Specifically, we began a company wide effort to include the business stakeholders into our opportunities. Prior to this initiative, we limited our contacts mostly to the technical side of the house.

In my sales training and consulting business, I see this self-limiting behavior frequently. The actual end user or IT will engage in a dialog about a solution, and the seller concludes this is who they should spend their time on. Unfortunately, these contact types have limited budgets, limited political power, and are compelled to NOT rock the boat; consequently, smaller deals result. Conversely, business people are steeped in a culture of rocking the boat, looking for growth opportunities, typically monopolize power in many organizations, and have larger budgets. (Most companies allocate 1-2% of the budget on IT, while sales and marketing get upwards of 50%). The opportunity is to learn to tap this reservoir for your sales initiatives. If you do, you will see growth in your average contract value.

As a starting point, here are three skills I suggest you adopt:

1. Change your vocabulary.

The first skill set to master is learning how to speak to different cultures. If your technical contacts typically want to talk about bandwidth, analytics, quality, throughput, or any topic that has a technical flavor, you have to limit those adjectives to that audience. The business culture uses terms like revenue growth, new product introduction, customer acquisition, and differentiation, to name a few. Take some time to connect each of your technical capabilities to business problems and issues. Then use their vocabulary to get their attention, build credibility and gain access.

2. Understand that nurturing and expectation setting will be required.

Just yesterday, one of the sales people in a client company told me cold calling on the business side wasn’t working for him. I wasn’t surprised. The business stakeholders aren’t aware of his company or his solution, so they naturally avoid engaging as a standard calendar management tactic. I suggested he take a three step nurturing approach to the targeted business stakeholders. First, inform them you are working with others in their company on an initiative that will have an impact on business results they may be interested in. But don’t ask for anything yet! Just let them know that you thought they should be aware of the initiative. If it’s an important topic to them, they’ll do some investigating. I call this creating hallway buzz.

Your communication may sound something like this: “Hi Joan, I’m reaching out because I’m working with your IT organization (John Doe) on a solution for the <insert problem in their vocabulary> that is impacting your <revenue, cost management, or some other business issue> results. Based on your role, I thought you might be interested. Let me know if you have any questions about the project.”

It’s very common at this point to get your hand slapped by the technical contact. They’ll get an inquiry from the business stakeholder as a result of your communication, and in turn, demand that you limit your communication to them. They do this from either a place of insecurity, habit of control, or many other common personal agenda related reasons including avoiding visibility on a non-budgeted project.  This is where expectation setting becomes critical. You’ll need to become comfortable setting boundaries with your technical contacts. I suggest describing your modus operandi and rationalizing the action with your company’s learning experience; it might sound something like this, “I’m sorry this activity was upsetting to you. We’ve found the best successes include engaging the business stakeholders in the dialog, whereas the opportunities that end up in no decisions usually exclude them from the conversation. I thought it would make sense to start that dialog, don’t you?” Ideally, you can steer the conversation to a collaboration agreement on the topic and put the hand slap behind you. In any event, your goal is to continue to include the business stakeholders in the dialog and the best case is when your technical sponsor sees the light and agrees to collaborate on their inclusion.

If they aren’t convinced with the operating rationale, it doesn’t hurt to help them see how it will help them personally. As an extreme example: “Joe, if you want to become CIO someday, you’re going to need to get comfortable engaging the business stakeholders in your initiatives, perhaps we can use this opportunity as a chance to collaborate together to help you build this skill.” Or less extreme, “Joe, you mentioned your frustration with how small the budget was for this project, doesn’t it make sense to see if someone else might be willing to add some funds to your initiative?” (Research from CEB indicates that the best sponsors are the ones that mobilize other stakeholders into the conversation, so it’s in your best interest to coach your contacts if needed.) Of course, whatever rationalization and personal interest tactic you take will require your judgement based on the context of your discussions and your rapport.

If you navigate this first stage of the nurturing process (and technical contact control effort) successfully, you are ready for stage two. At some point, when you’ve gathered enough information about the relevant problems their organization is experiencing, how much it’s costing them, and how that relates to key business issues they are focused on, you (or your now collaborative technical sponsor) should reach out to the business contact again to confirm this is a value proposition that is accurate and worth pursuing. (Notice, you haven’t asked to meet the business stakeholder yet. You’re nurturing the relationship with value before asking for time.) If you’ve done a good job gathering the information and articulating it in their vocabulary, don’t be surprised if they ask for a conversation at this point.

Here’s an example, “Hi Joan, reaching out to follow up on the XYZ project. After a series of investigative reviews we’ve identified a value proposition that I’d like to verify from a business perspective. We’ve found that a database problem has resulted in about 14% of your customers abandoning their website purchase process prior to checkout due to frustration. As a $100M company, the simple math says this is about a $14M issue. Wondering if you see it the same way or think it’s not worth solving in light of other issues. Your perspective would be valuable to me in my allocation of resources.”

Even if they don’t respond with a suggestion to discuss at this point or point you to another contact they delegate with the responsibility, you have another nurturing opportunity. I recommend a follow up communication to see if they would be interested in understanding the business proposal you will be submitting. I also suggest that you (or your collaborative sponsor) offer to invite them to the formal meeting with the technical team, but offer to provide them with a 15 minute executive overview if they don’t have time for the one to two hour meeting with the rest of the evaluation committee.

Guess which one they usually prefer? In the event they elect to go to the technical meeting, they can be a great resource for keeping the business proposal focused on the outcomes instead of price. I suggest using their presence as the rationale for starting with the executive summary identified below.

I’m sure you can imagine there are other ways to deliver value and build credibility with information in your nurturing campaign. I’ve only highlighted a few, but the idea is to build your credibility without a major ask too early. However, at some point you may need it. If you’ve done a good job and navigated the pushback from the technical team, you should be in a position for a big “ask” if the circumstances aren’t in your favor. “Hi Joan, I’m reaching out to ask for some help on the XYZ project. I’ve run into a <budgeting shortfall, prioritization problem, or other IT roadblock> that I could use some coaching on. Can I get 10 minutes of your time to share the details and see if you have any ideas for eliminating the $14M problem we’ve identified with your online storefront?”

If you’ve navigated this successfully, you will likely find yourself with a more powerful ally in your quest to close your opportunity. Along with the more powerful ally comes wider discretion over fixed budgets, the insight to reprioritize for business reasons, and a more willing sponsor to take you to even more powerful stakeholders should the need arise.

3. Restructure Your Pricing Proposal to be a Business Proposal.

Remember the suggestion to invite the business stakeholder to the proposal presentation, or offer to summarize it for them individually? The key to success on this topic is to structure it like a business proposal, not a solution overview and price quote. The executive summary should include the key problems uncovered, the impact of solving or not solving the problems in terms of revenue, cost reduction, or other tangible return, and the relation to the current business issues of the senior management. The technical details should follow last. The executive summary should not be a summary of your company’s history and solution overview as a majority of technology proposals tend to exemplify. 

Your goal should be to develop a proposal that compels action – not negotiation.


The example situation I described at the beginning of this article grew average productivity of sales people from $1.4M to over $10M in a five year time span, largely due to targeting more powerful stakeholders.

Although none of these tactics are foolproof, with practice, and anticipating the hand slap response, you’ll find your access to more powerful stakeholders (obstacle removers) improving along with your average contract value and sales cycle. Asking for forgiveness in light of a well thought out rationale can relax many ruffled feathers. I would also suggest practicing on your new relationships versus your long term customer relationships. New relationships tend to allow more leeway than longer established relationships where behaviors have been cemented in tradition. Also, as many who have learned to integrate two culture selling into their practice have told me, it’s a lot more fun to sell to the business side of the house!

Please “like” this post or leave a comment! It helps to spread the word on best practices.

Kevin Temple guides sales teams to be more agile and improve revenue outcomes. He can be contacted at The Enterprise Selling Group is a leader in delivering sales training, coaching and project oversight to improve the agility of sales teams around the world.

Build a Bigger Sales Funnel: Learn to Disqualify

I know it sounds counter intuitive, but learning to disqualify can help you build your sales funnel faster. If you happen to be one of the many that are hustling to rebuild a year end depleted funnel, this article may help.

Back in early 2009, during the height of the recession, I took on a new client named Imprivata. They deliver single sign on solutions to improve security in the healthcare marketplace. They were perplexed by their situation. After investing a lot of money into marketing automation, they had more leads than ever before, but their close rate was getting worse. It would have been easy to rationalize the decline of their close rate around the impact of the recession, but they wanted to be sure.

In an effort to flush out the answer, we implemented a disqualifying process, and the results were phenomenal. They ended up closing about 20% more opportunities per rep than the year before, and their average contract value increased 19%, all during the most significant economic downturn many of us have ever experienced. (Tom Brigiotta, VP Sales, Imprivata)

To understand how these results were achieved, I’ll start with a basic description of the disqualifying process and then connect it to the outcomes.

For Imprivata, we designed a two tier qualification question set. The first tier included:

  • Can the prospect define the problem set that needs to be addressed?
  • Can the prospect identify the impact of the problems?
  • Can the prospect identify the current business issues of their company or organization?

The problem identification question doesn’t have to be cut and dry. The sales person can also help the prospect develop the problem statement. As an example, if they contact a prospect because they engaged in some marketing automation activity that flagged their interest, the sales person would reach out and begin the dialog. A key part of that dialog would be to ask them why they were looking at this solution, in essence, getting the prospect to verbalize the problem set. If the prospect couldn’t verbalize the problem set, the rep could probe for existing problems: “Do your employees leave their passwords on sticky notes in plain sight?” “Does this pose security challenges?” “Do you have to abide by HIPAA regulations?” The objective is to surface the problem definition to identify the reasons for change and gain agreement on the problem set.

However, if the prospect wouldn’t agree to a problem definition, the qualifying question is rated as a “no” and they move to the second tier qualifying question explained below.

If the prospect could define the problem set, the next question in tier one is intended to uncover the implications of the unresolved problem set and help the prospect rank the problems against others that might be competing for their attention. Again, if the prospect can’t answer the question directly, a set of probing questions could be offered to help the prospect understand the value: “Have you been put on notice or fined for any security violations?” “Have you or your colleagues’ ever lost productive time due to lost or forgotten passwords?” “How long does it take for IT to help reset passwords?”

If the prospect still can’t mutually help develop the value proposition, then the second qualifying question is rated as a “no” and the seller would jump to level two.

Lastly, if the answers to the first two qualifying questions were positive, the prospect is asked to identify the current business issues of their organization. The objective is to connect the problem set to a higher level business issue that has the attention of senior management, which helps justify and prioritize this expenditure against a more circumspect criteria set. Many purchase requests are shot down because they don’t align with senior management’s current agenda. Again, if the prospect couldn’t identify the current business issues, the rep would be prepared to probe with an examples such as: “Most of our customers are focused on… lowering costs, or seeing more patients in each workday, or scaling their operation… do any of these apply to your situation?

As with the first two, if the answer to this qualifying question was rated a “no”, the second tier qualifying question was applied.

Tier Two Qualifying Question: “Can you introduce me to someone who can answer these questions?”

If the contact contact couldn’t answer the first tier qualifying questions, and refused to introduce another stakeholder, the engagement was put on hold, usually by politely putting the contact into another automated marketing nurturing process to be followed up when another trigger was tripped. On the other hand, if they did introduce a new stakeholder, the qualifying process was repeated with the new contact.

So how does this help you build a bigger funnel and sell more? The answer is twofold.

First, most enterprise selling professionals report no decision outcomes as representing 30-60% of their selling efforts. No decisions outcomes are frequently caused by sponsors that can’t effectively articulate the need to change, prioritize the need to change against other initiatives that are competing for the same money, or they fail to align their needs with the current agenda of their superior management who find it easier to ignore requests that lack meat. By removing these contacts from further activities that have no chance of producing a positive outcome like demonstrations or follow up communication, the seller is freeing themselves to pursue other opportunities that can buy.

I’m reminded of the adage taught to me by a sales manager I had early in my career. “When a prospect fails to buy, they have robbed you twice. First they rob you of the time you spent on them, and second, they rob you of the opportunity to spend that time on someone who can buy.”

Secondly, the qualifying questions actually help a buyer buy more effectively which leads to higher contract values. In essence, the answers to the qualifying questions help the contact to shape the problem definition more articulately, justify the purchase more clearly in light of other competing options, and more effectively compel senior management to take action with their own interests. This framework frequently compelled decision makers to expand the scope to include other organizations or stakeholders that weren’t included in the dialog but could benefit from the application.

Kevin Temple guides sales teams to be more agile in their disqualifying process and improve revenue outcomes. He can be contacted at The Enterprise Selling Group is a leader in delivering training, coaching and project oversight to improve the agility of sales teams around the world.

Sales Leaders: 3 Ways to Get Your Team Off to a Good Start in the New Year

race-against-life If January marks the beginning of a new fiscal year for you and your team, here are three leadership suggestions that can help your team get started on building a productive funnel.
  1. Define a Personal Quota Now!
It seems like the larger the organization, the longer it takes to distribute new annual quotas. I’ve witnessed some organizations take three or four months to distribute official quotas. The associated sales behavior in the absence of a quota is palpable. It’s no wonder why the first quarter is typically the least productive quarter for enterprise sales teams. My suggestion is to select an interim aggressive growth target. For example, if your company is on a 20% growth trajectory, select a 30% or 40% growth target over the prior year for each personal quota target. Then develop each individual territory plan around this interim aggressive goal; including prospecting targets, call goals and so forth. The idea is to build and execute a territory plan without waiting for the machine to catch up. Then when it does catch up, the likely lower quota that actually gets assigned will feel like a relief rather than unimaginable, and your team will already be firing on all cylinders.
  1. Identify, Develop and Roll Out a Strategic Initiative to Rally the Team.
Remember the adage, “When the going gets tough, the tough get going.” The idea is to select an initiative that is smart, achievable, adds to the success of the team, and moreover, is measurable. It could be a focus on adding services to every sale, or focusing on dominating a certain competitor, or a tactical target to call on three new executives in the largest account as just a few examples. Ideally it develops a muscle that is atrophied on your team, produces a measurable success, and is achievable. Use the initiative to spur action, share information, and further develop your own leadership skills. Here are some key topics to include in your Strategic Initiative Plan and communication: Why: Communicate why the initiative is important, and why it’s good for the team and individual. What: Communicate tangible, measurable goals. How: Communicate how the goals are to be achieved. This might include the identification of new skills, training, reading a book, activities that have not been used before, or teaming suggestions. Consequence/Reward: Don’t forget to tie the initiative to a reward and consequence. It could be a specific SPIFF or a simple lunch on you, but a payoff is critical to the measurement and achievement recognition. Conversely, the consequence should be fair in proportion to the initiative and not arbitrary.
  1. Celebrate Small Victories.
With twelve months in front of you, or three if you’re really quarterly focused, a strategic initiative can lose steam very quickly in the face of everyday distractions. Good leaders celebrate the small victories on the way to success. For example, if your selected strategic initiative is to call on three unfamiliar executives in your key accounts, celebrate success when each team member achieves their first appointment. The idea is to maintain a focus, keep the team motivated, and rise above the noise of the daily din. Kevin Temple guides sales teams to be more agile and improve revenue outcomes. He can be contacted at The Enterprise Selling Group is a leader in delivering sales training, coaching and project oversight to improve the agility of sales teams around the world. Missed Kevin’s other posts on Sales Agility? Take a look at his most recent posts here.